Written Answers Nos. 144-159
144. Deputy Michael McGrath asked the Minister for Finance the legislative basis for the application of the code of conduct on mortgage arrears, the consumer protection code, the mortgage arrears resolution process and the mortgage arrears resolution targets in respect of lenders which are regulated entities and lenders which are non-regulated entities; and if he will make a statement on the matter. [14154/16]
Amharc ar fhreagraThe Code of Conduct on Conduct on Mortgage Arrears (which includes the Mortgage Arrears Resolution Process) and the Consumer Protection Code are issued under Section 117 of the Central Bank 1989. The Central Bank has the power to administer sanctions for a contravention of these Codes, under Part IIIC of the Central Bank Act 1942. This applies to all regulated entities operating in the State.
The Deputy will be aware that the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the Consumer Protection Code and the Code of Conduct on Mortgage Arrears.
I should add that the Central Bank has updated each of the Codes in order to ensure that Credit Servicing Firms are subject to these Codes directly in their own right. This has been done for the sake of certainty and transparency, in order to make it explicit that the activity of credit servicing is a regulated activity within the meaning of the Codes and firms carrying out that activity are regulated entities in their own right with respect to that activity. As I have previously said, the Mortgage Arrears Resolution Targets (MART) were introduced as a prudential policy measure for credit institutions. Full details of their legal basis were provided in the Central Bank's press release which is available here: https://www.centralbank.ie/press-area/press-releases/documents/approach%20to%20mortage%20arrears%20resolution%20-.pdf.
Mortgage Arrears Resolution Targets applied from March 2013 to December 2014. They had applied to ACC Bank plc, Allied Irish Bank plc (including AIB Mortgage Bank, EBS Limited and EBS Mortgage Finance), The Governor and Company of the Bank of Ireland (including Bank of Ireland Mortgage Bank and ICS Building Society), KBC Bank Ireland plc, Permanent Tsb plc and Ulster Bank Ireland Limited with respect to their Republic of Ireland principal dwelling home/primary residence (PDH ) and buy-to-let (BTL) mortgagees. In April 2015, the Central Bank determined that relying on common quarterly solution targets across all banks was no longer appropriate and wrote to each bank setting out new requirements.
I would reiterate that authorised Credit Servicing Firms (including those who have notified the Central Bank that they wish to avail of the transitional arrangements provided for under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015) are required to comply with the requirements of financial services legislation including the Central Banks statutory codes and in particular the CCMA (including as it pertains to matters such as engagement with the borrower). They are also required to comply with the provisions of other legislation in force in the State as it applies to their activities, including the Personal Insolvency Act 2012.
145. Deputy Pearse Doherty asked the Minister for Finance how he calculates spending by local authorities for the purposes of the expenditure benchmark and in the calculation of fiscal space; and if he will make a statement on the matter. [14185/16]
Amharc ar fhreagraFiscal space is estimated using the Expenditure Benchmark. The starting point for the Expenditure Benchmark calculations is General Government expenditure as per European System of Accounts 2010 (ESA 2010), which is the aggregate consolidated expenditure of the Central Government sub-sector and the Local Government sub-sector. So Local Authorities expenditure is treated in the same way as the other components of General Government expenditure.
Expenditure of local government comprises both current and capital expenditure and includes expenditures by all non-market corporations under local government control. These data are produced in accordance with ESA 2010.
146. Deputy Michael McGrath asked the Minister for Finance the drawdown from the €250 million he made available through the Exchequer Central Fund to the credit institutions resolution fund in December 2011, by amount used, by credit union, in each of the years 2011 to 2016 to date; and if he will make a statement on the matter. [14216/16]
Amharc ar fhreagraThe Government put €250 million into the Credit Institutions Resolution Fund which was established by section 10(1) of the Central Bank and Credit Institutions (Resolution) Act 2011 (as amended) (2011 Act). The purpose of the Resolution Fund under the 2011 Act is to provide a source of funding for the resolution of financial instability in, or an imminent serious threat to the financial stability of, an authorised credit institution. In particular the Resolution fund may be used for:
- the payment of financial incentives for transfers;
- providing capital for a bridge bank (details of a bridge bank are set out in Part 4 of the 2011 Act);
- meeting the expenses of the Central Bank incurred when discharging functions under the Act, and
- making certain payments under the Act, for example, the payment of expenses to an assessor appointed under the Act.
To date, the resources of the Resolution Fund have been utilised to fund the resolution of 4 credit unions. In the case of 3 of those credit unions, the resolution action taken was a directed transfer under the 2011 Act, and the Resolution Fund funded a financial incentive for the transferee. The remaining case was a liquidation, and no incentive was paid from the Resolution Fund in respect of that resolution. In each of the 4 cases, the Central Bank discharged its third party resolution-related costs against the Resolution Fund.
The amounts paid or payable to date from the Resolution Fund for incentives in each of the 3 transfer resolution cases are as follows:
- Newbridge Credit Union Limited: €27 million
- Howth Sutton Credit Union Limited: €2.15 million
- Killorglin Credit Union Limited: €2.15 million
- Central Bank resolution-related expenses that have been discharged against the Resolution Fund to date amount to €2.7 million.
To date €35.41 million has been drawn down from the Resolution Fund by way of expenditure relating to incentives for credit union resolution, Central Bank resolution-related expenses and interest expenses.
The breakdown of expenses per year of operation of the Resolution Fund is as follows:
|
October 2011 to December 2012* |
€1.3 million October 2011 to December 2012* |
|
2013 |
€26.9 million 2013 |
|
2014 |
€6.9 Million 2014 |
|
2015 |
€0.3 million |
|
2016 (YTD) |
€0.01 million |
Total income over the period is €34.6m which is made up of levies of €28.7m and other income of €5.9m.
Under Section 12(2) of the Resolution Act, as Minister for Finance I am entitled to be reimbursed from the Resolution Fund for all contributions to that Fund and for any financial incentive provided.
*The CIRF was established by the 2011 Act, and was only in operation from October in 2011; therefore the first set of published accounts for the CIRF relate to period from 28 October 2011 to 31 December 2012.
147. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 62 of 26 May 2016, the number of microbreweries resident outside the State which qualified for tax relief in each of the years 2011 to 2015; and if he will make a statement on the matter. [14218/16]
Amharc ar fhreagraI am informed by Revenue that 17 claimants availed of the relief in 2015 on a total of 7,023 hectolitres of beer produced in 37 qualifying microbreweries based in other Member States. These claimants are Irish-based traders who bring beer into the State from a variety of suppliers. Revenue advise me that while information on the number of other Member State microbreweries represented in the claims for the relief for previous years is not collated, they can advise me that 5 claimants and 13 claimants availed of the relief on beer produced by qualifying microbreweries in other Member States in 2013 and 2014, respectively.
148. Deputy Michael McGrath asked the Minister for Finance the tax expenditure associated with the home renovation incentive in each year since it was established; and if he will make a statement on the matter. [14219/16]
Amharc ar fhreagraI am advised by Revenue that data relating to the Home Renovation Incentive (HRI) is available from the statistics section of the Revenue website at http://www.revenue.ie/en/about/statistics/index.html. Specifically, the most recently available information on the cost of the scheme is in the Tax Expenditures section of the page at http://www.revenue.ie/en/about/statistics/hri-stats.html.
It should be noted that the value of the tax credits referred to therein is not reflective of the cost to the exchequer as not all credits have been claimed to date. Furthermore, it should be noted that tax credits claimed by an individual under HRI are generally split evenly over a two year period.
149. Deputy Michael McGrath asked the Minister for Finance if he is considering anti-avoidance measures relating to the potential misuse of the dwelling house exemption; and if he will make a statement on the matter. [14221/16]
Amharc ar fhreagraThe dwelling house exemption is a provision of the capital acquisitions tax (CAT) legislation. It allows for the tax-free transfer by way of gift or inheritance of the residential property in which a beneficiary lives, subject to certain conditions. These conditions include a requirement that the beneficiary has been living in the property for three years prior to receiving it and that they remain living in the property for six years afterwards, except in certain special circumstances. It is also a condition of the relief that the beneficiary not be beneficially entitled to any other residential property at the time of the transfer.
The underlying purpose of the relief, which I consider to be reasonable, is to prevent so far as possible cases of hardship arising from a tax perspective when a person is gifted or inherits what is, in effect, their home. My Department and the Revenue Commissioners have encountered some evidence that individuals may be using the relief as a way of passing on wealth tax-free in a manner which is not in line with the core aim of the relief.
My Department and the Revenue Commissioners are currently working to gather and assess information relating to such possible practices and to consider whether the current scope of the relief is in line with its original spirit. The work of investigating this issue and developing potential policy responses is current and ongoing.
150. Deputy Michael McGrath asked the Minister for Finance the cumulative yield from the levy on private pension funds; if all outstanding levies due have now been collected; and if he will make a statement on the matter. [14222/16]
Amharc ar fhreagraI am informed by Revenue that the yield for all relevant years from the Stamp Duty levy on pension schemes is as set in the following table.
|
Year |
Yield €m |
|
2011 |
463 |
|
2012 |
483 |
|
2013 |
535 |
|
2014 |
743 |
|
2015 |
169 |
|
Total |
2,393 |
For each year of the levy, Revenue has an on-going compliance programme to ensure the "chargeable persons" have included all scheme assets in the statements required to be submitted; that the assets have been correctly valued in the statements; and that outstanding payments, if any, are collected.
151. Deputy Michael McGrath asked the Minister for Finance the total value of prizes paid and the percentage this represents of the total prize bonds outstanding in each of the years 2011 to 2016 to date; and if he will make a statement on the matter. [14223/16]
Amharc ar fhreagraThe NTMA has advised me that the value of prizes in respect of prize bonds, and these prizes as a percentage of total prize bonds outstanding, in each of the last five years, and to-date during 2016, are as follows:
|
Year |
Fund at Year-End €m |
Prizes Paid €m |
% of Year-End Fund |
|
2016 (end-May) |
2,689.18 |
12.80 |
0.48 |
|
2015 |
2,481.0 |
28.9 |
1.16 |
|
2014 |
2,176.4 |
31.7 |
1.46 |
|
2013 |
1,928.7 |
35.2 |
1.83 |
|
2012 |
1,648.5 |
46.0 |
2.79 |
|
2011 |
1,447.9 |
42.0 |
2.90 |
152. Deputy Michael McGrath asked the Minister for Finance the rate of compliance with the local property tax; and if he will make a statement on the matter. [14224/16]
Amharc ar fhreagraI am advised by Revenue that compliance in respect of 2016 Local Property Tax (LPT) currently stands at 90% and that this will increase further as payments made on foot of approximately 290,000 compliance letters issued by mid May 2016 are processed. I am also advised by Revenue that debt collection/enforcement action, including deductions from salaries and pensions, is underway against property owners who failed to respond to the compliance letters within the timeframe allowed.
153. Deputy Michael McGrath asked the Minister for Finance the number of economists he employs, specifically on banking policy; his plans to increase this number; and if he will make a statement on the matter. [14226/16]
Amharc ar fhreagraSince 2011 the Department has implemented organisational changes with the aim of developing a modern, professional and forward-looking Department. We have adapted, realigned and enhanced our resources in order to achieve the goals we set ourselves. This has involved the building and expanding of the economic expertise and capability across the Department.
A total of 44 staff within the Department hold a Masters in Economics qualification (a further three staff are in the process of completing their Masters of Economics study).
Staff across all grades in the Department hold qualifications in Economics at Certificate, Diploma, Degree, Masters and PhDs levels.
All staff within the Economics Division hold a Masters in Economics or higher qualification and resources have been recently allocated within that division dealing with monetary and financial economic analysis.
In addition, staff within the Banking Division hold a total of 50 qualifications. Three staff from this Division hold a Masters in Economics qualification.
The Department continues to grow its expertise in the area of economics through the recruitment of staff via the Irish Government Economic and Evaluation Service (IGEES) and also through recruitment via the Public Appointment Service (PAS).
Through the Refund of Fees Scheme, staff participate in learning leading to an accredited qualification and support is offered to staff who undertake Masters in Economic Policy through this Scheme. It is expected that further applications for this course will be made for the 2016/2017 academic year to further strengthen the level of economic knowledge within the Department.
154. Deputy Michael McGrath asked the Minister for Finance the fees his Department has paid to third parties relating to a possible flotation of a bank (details supplied); and if he will make a statement on the matter. [14227/16]
Amharc ar fhreagraThe Department of Finance has to-date paid €385,502 to William Fry Solicitors in relation to work carried out on the capital reorganisation of the bank in 2015 and preparation for a potential IPO of AIB. These fees relate to a period from their appointment in April 2015 (following a competitive tender process) up to the present date. They relate to both IPO preparatory work and related advice given to my Department concerning the capital reorganisation undertaken by AIB in December last year which allowed for the return of €1.64bn cash to the State.
The capital reorganisation was necessary to make the bank's capital structure fully compliant with new European rules and was therefore a prerequisite to any disposal of the State's shareholding in AIB. Goldman Sachs also provided financial advice to the Department in respect of this reorganisation on a pro-bono basis.
In December 2015, Rothschild & Sons were appointed as an Independent Financial Advisor to my Department (following a competitive tender process), to assist in the preparation for a potential IPO. No fees have yet been paid in this regard.
My Department has also agreed with AIB that all third party fees incurred by the Department of Finance in preparation for an IPO will be reimbursed by the bank.
The Department of Finance regularly publishes details of all consultancy fees paid, attributed to the relevant project. Fees paid to the end of March 2016 can be found here: http://www.finance.gov.ie/who-we-are/financials/consultancy/consultancy.
155. Deputy Michael McGrath asked the Minister for Finance if he will consider increasing the bank levy on financial institutions that do not reduce standard variable mortgage rates. [14229/16]
Amharc ar fhreagraAs the Deputy is aware, the Programme for Government makes it clear that it is not ethically acceptable for Irish banks to charge excessive interest rates on standard variable rate customers. The Government has committed to take all necessary action to tackle high variable interest rates; including through establishing a new code of conduct for switching mortgage provider, administered by the Central Bank and the development of a new, easy-to-use standardised and dedicated switching form. We will also request the Competition and Consumer Protection Commission to work with the Central Bank to set out the options for the Government in terms of market structure, legislation and regulation to lower the cost of secured mortgage lending and improve the degree of competition and consumer protection. These are Year 1 Actions in the programme.
Central Bank research on the influences on standard Variable Mortgage Pricing in Ireland published last year identified three main reasons for higher rates in Ireland.
First, the pricing of loans needs to reflect credit risks. In Ireland these risks are elevated due to high levels of non-performing loans and the lengthy and uncertain process around collateral recovery. Second, competition is weak. This is not unrelated to credit risks since high credit risk deters new players from entering the market. Third, bank profitability is still constrained by legacy issues. Profitability is essential to ensure banks build up adequate capital buffers to meet increasing regulatory requirements and to withstand future adverse shocks.
I think that it is fair to say that there have been considerable movements in the mortgage offerings of the Irish banks in the last twelve months since my meetings with the banks. As recently as last month, two banks made additional reductions to their mortgage offerings. There has also been media speculation on the entry of another new mortgage provider into the market and the additional competition should help to put further pressure on the existing banks to reduce their rates.
The Financial Institutions (Bank) Levy was introduced for the three-year period 2014 to 2016 in Finance (No. 2) Act 2013, with the purpose of enabling the banking sector to contribute to economic recovery. The annual yield of the levy is approximately €150 million. In my Budget 2016 speech last October, I announced the extension of the levy to 2021, with a review to be carried out into the methodology used to calculate the levy. All taxation measures are considered as part of the annual budgetary process and I will not comment on changes ahead of that consideration.
156. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 108 of 3 December 2015 if he has concluded the investigation into the tax affairs of medical consultants; the lessons learned for tax compliance; and if he will make a statement on the matter. [14230/16]
Amharc ar fhreagraI am advised by Revenue that their programme of compliance interventions in relation to the tax affairs of medical consultants is ongoing with further additional interventions being opened as necessary. At end March 2016, a total of 752 Revenue compliance interventions had been opened on medical consultants and their controlled companies, with some 370 of these interventions having been finalised, resulting in settlements of almost €46.5 million, including tax, interest and penalties. There have also been 24 associated publications in the Quarterly Lists of Tax Defaulters published in accordance with the provisions of section 1086 of the Taxes Consolidation Act 1997.
I am aware that Revenue continues to evaluate the programme towards targeting specific tax risks in the sector and leveraging tax compliance generally.
157. Deputy Michael McGrath asked the Minister for Finance the number of successful applications, by relevant area, under the living city initiative; and if he will make a statement on the matter. [14231/16]
Amharc ar fhreagraApplications for the Living City Initiative (LCI) are only required to be made to the relevant local authority under the residential element of the scheme. Applications to local authorities are not required to be made under the commercial element of the scheme and thus it is likely to be early next year before information on this aspect of the scheme will become available. Based on information received from the City and County Councils to date, the number of applications received under the residential element per eligible city is as follows:
|
City |
Applications Received |
|
Dublin |
18 |
|
Cork |
4 |
|
Limerick |
0 |
|
Waterford |
7 |
|
Kilkenny |
2 |
|
Galway |
2 |
Details of the numbers participating in the commercial element of the scheme should become available in early 2017, by which stage the tax returns for 2015 will be filed and processed.
The Initiative has only been in operation for just over a year, and take-up of the scheme is lower than anticipated considering up to 100% of relevant expenditure may be tax relieved. My officials are currently reviewing the LCI and considering potential changes to the scheme.
Any proposed amendments will be considered in the context of the Budget and Finance Bill.
158. Deputy Michael McGrath asked the Minister for Finance the interest the Revenue Commissioners levied and collected from the late payment of tax liabilities, by tax category, in each of the years 2012 to 2015; and if he will make a statement on the matter. [14232/16]
Amharc ar fhreagra159. Deputy Michael McGrath asked the Minister for Finance the penalties the Revenue Commissioners levied and collected from the late payment of tax liabilities, by tax category, in each of the years 2012 to 2015; how this is broken down across different categories of tax; and if he will make a statement on the matter. [14233/16]
Amharc ar fhreagraI propose to take Questions Nos. 158 and 159 together.
I am advised by Revenue that interest and penalties charged and collected as part of their compliance intervention programmes is as set out in the following tables.
Table 1 - Interest
|
Interest |
2012 |
2013 |
2014 |
2015 |
|
PAYE |
€6.13m |
€12.74m |
€15.28m |
€19.29m |
|
PRSI |
€1.10m |
€2.13m |
€2.24m |
€2.48m |
|
VAT |
€18.90m |
€19.64m |
€17.57m |
€20.80m |
|
INCOME TAX (Self-Employed) |
€18.17m |
€23.27m |
€27.76m |
€26.36m |
|
CORPORATION TAX |
€7.57m |
€14.53m |
€12.86m |
€18.27m |
|
CAPITAL GAINS TAX |
€5.77m |
€12.15m |
€5.62m |
€7.47m |
|
RELEVANT CONTRACTS TAX |
€1.47m |
€1.45m |
€.80m |
€1.25m |
|
PROFESSIONAL SERVICES WITHOLDING TAX |
€.04m |
€.02m |
€.01m |
€.18m |
|
DEPOSIT INTEREST RETENTION TAX |
€.003m |
€.01m |
€.08m |
€.46m |
|
LIFE ASSURANCE EXIT TAX |
€.06m |
€.30m |
€.0004m |
€.30m |
|
DIVIDEND WITHOLDING TAX |
€.05m |
€.23m |
€.16m |
€.13m |
|
ENVIRONMENTAL LEVY |
€.02m |
€.05m |
€.01m |
€.01m |
|
RELEVANT TAX ON SHARE OPTION |
€.02m |
€.18m |
€.23m |
€.27m |
|
BETTING DUTY |
€.01m |
€.04m |
€.04m |
€.01m |
|
STAMP DUTY |
€2.36m |
€3.06m |
€2.74m |
€2.06m |
|
CAPITAL ACQUISITIONS TAX |
€1.25m |
€2.55m |
€2.05m |
€1.41m |
|
INVESTMENT UNDERTAKING TAX |
€.01m |
€.00m |
€.07m |
€.00m |
|
LOCAL PROPERTY TAX |
€.00m |
€.0001m |
€.01m |
€.01m |
|
TOTAL |
€62.93m |
€92.39m |
€87.53m |
€100.76m |
Table 2 - Penalties
|
Penalties |
2012 |
2013 |
2014 |
2015 |
|
PAYE |
€2.36m |
€3.75m |
€3.89m |
€5.29m |
|
PRSI |
€.31m |
€.24m |
€.40m |
€.44m |
|
VAT |
€4.49m |
€5.35m |
€6.03m |
€5.03m |
|
INCOME TAX (Self-Employed) |
€4.48m |
€4.64m |
€8.58m |
€4.40m |
|
CORPORATION TAX |
€1.09m |
€4.63m |
€7.77m |
€2.80m |
|
CAPITAL GAINS TAX |
€1.23m |
€1.30m |
€1.40m |
€.46m |
|
RELEVANT CONTRACTS TAX |
€1.18m |
€.87m |
€.85m |
€1.93m |
|
PROFESSIONAL SERVICES WITHOLDING TAX |
€.06m |
€.01m |
€.01m |
€.01m |
|
DEPOSIT INTEREST RETENTION TAX |
€.00m |
€.003m |
€.00m |
€.00m |
|
LIFE ASSURANCE EXIT TAX |
€.003m |
€.00m |
€.02m |
€.00m |
|
DIVIDEND WITHOLDING TAX |
€.004m |
€.01m |
€.01m |
€.03m |
|
ENVIRONMENTAL LEVY |
€.00m |
€.001m |
€.001m |
€.00m |
|
BETTING DUTY |
€.03m |
€.03m |
€.01m |
€.00m |
|
STAMP DUTY |
€1.90m |
€1.67m |
€1.34m |
€1.32m |
|
CAPITAL ACQUISITIONS TAX |
€.20m |
€.48m |
€.24m |
€.22m |
|
INVESTMENT UNDERTAKING TAX |
€.0004m |
€.00m |
€.00m |
€.00m |
|
LOCAL PROPERTY TAX |
€.00 |
€.0001m |
€.0003m |
€.0002m |
|
TOTAL |
€17.33m |
€23.00m |
€30.54m |
€21.95m |
